How To Make A Church Finance Report: 5 Steps To Transparency (2024)

Among the less exciting but still vastly important parts of a church is creating a church finance report, which is necessary for every church. While it may not be as interesting or fun as starting a new ministry or growing your church, church financial reports are essential to making those other events happen.

During my time as an assistant director at a church of around 10,000 people in Los Angeles, I learned how transparency is key to that level of success. If you aren’t clear with your congregation and members in every aspect, it will be difficult to build trust. And it starts with the “boring” but necessary parts of your church, like church finances.

I’ll cover:

• What Is A Church Finance Report?
• What Should Be Included In A Church Finance Report?
• Why Do Churches Need Financial Reports?
• How To Write An Annual or Quarterly Church Finance Report

What Is A Church Finance Report?

A church finance report is a straightforward document that involves revealing details about the current financial situation of your church. In it, you detail parts of the finances, including spending, income, and the current funds the church has in savings. This can be as detailed or simple as you want it to be.

A church financial report should be filed either quarterly or annually. The former is often better since it gives a frequent update to all of your members and any financial partners for the church. It shows everyone involved a clear look at how the church is currently operating. While numbers aren’t everything, this report can be informative.

Do Churches Have To File Financial Statements?

Let me be clear from the start: no, you aren’t required to file audited financial statements as a church. After all, this is for the benefit of your congregation and not necessarily related to what you submit to the government. That said, I find that it is your obligation as a church to release a financial statement to your congregation regularly.

For one, it is helpful for your members and partners in keeping them informed of what the church’s financial status is every step of the way. In addition, creating these frequent financial statements can even help when it comes to end-of-year reports for the government and all that. After all, you’ll have easy access to any necessary details.

What’s The Difference Between Church Budgets & Financial Statements?

A key point to watch out for when creating a church financial report is to not confuse it with a church budget. These are very much separate affairs that are both crucial to your church’s financial health.

A church budget is often more detailed in the minute aspects of the church, going over every single penny that might be divided between departments and ministries.

On the other hand, a church financial statement is an overview of all financial parts of the church. It includes details about the money in savings, how much was spent in the last quarter or year, etc. In general, a church budget only goes over spending and how your financial resources are going to be allocated.

Lastly, timing of when you need a church budget and financial statement is completely different, too. A financial statement looks at the past quarter or year of the church, how money was spent, and the present state of the finances.

However, a church budget takes the present state and looks to the future of how that money will be spent. Both are equally important and should happen often.

What Should Be Included In A Church Finance Report?

Before I dive deeper into creating a church financial report, there are a few sections that must be included in the document. Again, you choose how detailed you want to be in these sections, but they are all required parts of a church financial report. Make sure to include all five of these elements in each report you do.

Balance Sheet

The balance sheet is a table that generally shows all assets that a church has. Here, you’ll list any assets you currently have, such as buildings, property, money in checking and savings accounts, and so on. On the other side, you usually include your liabilities.

These are the monthly, quarterly, or annual features that take away from your assets. This could be an active loan on the church building or the like. The goal is to then “balance” out the two by subtracting your current liabilities from your existing assets to show what your “net assets” are.

Keep in mind that assets are different from income (more on that in a bit) since they include both monetary and non-monetary features of the church.

Income Statement

This section is rather simple: this is where you include all of the income and revenue that your church gained in the last quarter, month, year, etc. This should include all forms of incoming, new money that you received during this time period.

Be sure to feature money gained through tithes, offerings, donations, grants, and all that. Break down each part of these categories and show the exact amount that was gained for that group. The bottom line is that the church income statement includes every bit of cash that comes into the organization.

Expense Statement

There is another half of the statement section. The income statement shows how much money you have received in the last period of time, while the expense statement shows how much has been spent. This is where you reveal every single item or category of items that money has been used on.

This is where you include your general church expenses and operating expenses, such as bills, loans, salaries, and the like. In addition, you can include the budgeted money that was spent on each of the ministries. Be sure to carefully divide up the total expenses here to help it match nicely with the income statement side.

Fund Balances

Finally, fund balances have to do with the various funds that your church is currently focusing on. For instance, you have your tithes that come in weekly, but that might not necessarily be a fund you’re raising money directly for. That is your typical weekly or monthly income.

A fund might be a separate goal you have, such as raising funds for a new building or ministry. If you’re raising money towards a specific goal(s), it needs to be noted in this section. This not only informs the community on how that fund is going, but what you’re working towards in the future.

Summary Statement

Finally, you should end your church financial statement with a summary section. This is where you will wrap up everything in the document nicely. It can be short and sweet, but the general idea is to give some key pointers to take away from the financial report.

For instance, perhaps noting the percentage growth you’ve experienced in income or that you sufficiently raised enough money to fund a project. This is also your chance to reveal new projects you’re going to raise money for and even perhaps throw in some images of recent major moments throughout the past quarter or year.

Why Do Churches Need Financial Reports?

Churches need financial reports because of a few reasons. The easiest one is that it simplifies the procedure of filing the required reports at the end and beginning of the year. You’ll have all your ducks in a row, so to speak, and be able to take information from these reports to apply elsewhere.

In addition, a church financial statement helps the church keep track of spending and current revenue. This becomes tougher the larger your church grows, so taking easy steps like this can reduce some of the pain of figuring out where that missing amount of money went down the road.

Outside of those helpful technical reasons, a church financial report is also crucial to your church members and financial partners. If there is an aspect of churches that I have seen missing the most, it is transparency. There are far too many churches who keep certain events and elements hidden behind closed doors, which should never happen.

If you want to thrive and grow as a church, transparency is key in everything you do. Otherwise, you are liable to lose trust and members in the process. I have seen it time and time again. Creating and sharing a detailed, transparent church financial report with everyone publicly is one of the easiest ways to build that trust and promote good stewardship.

How To Write An Annual or Quarterly Church Finance Report

Now, it is time for the main event: writing your church financial report. You know the parts that are required in the document, so it is time to assemble everything together. These are the five basic steps (one of which is, technically, optional) to simplify the process even further.

This doesn’t have to be one of the more daunting tasks for your church or nonprofit organization, if you follow these straightforward steps.

1. Document Everything

The church financial report begins with the data that makes it up. You’ll need this exact data to be able to create the document. To do this, be sure to start well ahead of creating the report. Before you even begin on the report, you should be documenting everything that happens in your church.

Keep every receipt, expensive, weekly tithes, donation, fundraising, and whatever else written down somewhere. This will not only help you keep adequate track of everything that is going on in the church, but save you a bunch of time when it comes time to create the new financial church report. You’ll have all of the documents you need ready to go.

2. Collect Data From All Departments

As you begin writing the financial report, you’ll need lots of precise data to form the report with. This means setting people in charge of every department and ministry whose job is to keep ahold of all the necessary data.

Every expense and income should be kept track of from those people, and they should have a strict deadline by which they hand it to you, well ahead of the report’s finalization. Ensure that these designated people write down everything, even if it isn’t necessary for the report. It’s better to cover the unnecessary stuff, too, than to mistakenly forget something important.

3. Get Outside Assistance (If Necessary)

This third step is a bit of an optional one, but the larger your church is, the more help you’ll need. While a smaller church might be able to get by working together with its few departments to make a financial report, it can be tough when you have 100-plus staff members and dozens of ministries.

In this case, you should hire some outside assistance when it comes to all of these financial decisions. This is where a dedicated accountant or accounting firm can help with bookkeeping, church accounting, and so on. It also is great to have some outside assistance in forming the report as they can do a lot of the busy work for you.

You’ll just need to gather the data and they can build it together into a form that is transparent and unbiased. It will cost you some money, though, but you can mitigate this by hiring your own proprietary accounting department.

4. Write Each Section Thoroughly

In the midst of creating the actual annual financial report (or quarterly, etc), it is crucial that you thoroughly cover every element and department. You shouldn’t ignore any facts or leave any data out, and double, triple, and quadruple check every segment of financial information. This is another reason why it is important to not let a single person create this report.

Have more than one person work on this report, perhaps even divide up the five main sections between staff members. This allows the others to look at the parts they didn’t work on with a fresh set of eyes and quickly note any mistakes.

5. Be Transparent in All Financial Aspects

Covering every part of the financial report will let you go a long way towards completing this final step: being transparent. I mentioned this at the beginning, but financial transparency is so important for a church to succeed.

The point of the financial report is to provide details about the backend of your church to the congregation, including any valuable FAQs (frequently asked questions) you think might be helpful.

If your church is struggling financially, don’t hide it. Don’t surprise anyone down the road, but make it clear from the start. If this is a known factor, you never know, things can change. If the church is thriving financially, let that be known, too. Give your church the chance to celebrate together.

Transparency is how you garner trust, both with the church members and the financial partners you might have. If you are struggling, businesses in your community and various wealthy figures might not be happy, but at least they know you’re not hiding anything.

That keeps your church’s relationship with everyone fresh and trustworthy on all sides.

Resources for Simplifying the Church Finance Report

Once you are done with your church financial report, it is time to move on to what’s next for your church. Hopefully, you learned something from creating your first report that will help you speed up the process in the future. In fact, there are ways to make the entire situation take less years off your life. You should also look into starting a church finance committee.

There are several church management software that you should use right now as a church leader. We previously broke down the 10 best church management software that can help you keep up with finances, income, and expenses with ease. Plus, it is nice to have both a paper and digital trail of all financial happenings in your church. Or, find specific church finance software here.

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